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Rate increase

  • 12 April 2021
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Userlevel 3

My 12 month fixed rate term with PP finishes at the end of May. To remain with PP I have two options, either to renew on another 12 month fixed term or switch back to a variable rate. I face an increase in my kWh rate on the fixed term of nearly 21% and if I return to the variable rate it’s an increase of 17%. This seems pretty hefty and will not endear me to PP! Has the wholesale price of electricity risen so much?   

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Best answer by stephenrand 12 April 2021, 18:06

Here's what Ofgem said when they announced the increase in the price cap  

Ofgem has announced today that from 1 April 2021 the price cap will return to pre-pandemic levels, principally as a result of changes in wholesale energy prices.  

When wholesale prices fell sharply last year in the wake of the first lockdown, the level of the price cap fell by £84 in October to its lowest level yet for the current winter period.   

Demand for energy has since recovered which has pushed wholesale prices back up to more normal levels. 

For six months from 1 April the price cap will increase by £96 to £1,138 for 11 million default tariff customers, and by £87 to £1,156 for 4 million pre-payment meter customers.

About two/three weeks ago, MSE indicated Pure Planet were the cheapest of the well-established suppliers…

Stephen

 

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Userlevel 7
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Hi ,
Not sure, as you're talking to fellow PP customers on this forum, not directly to PP. 

If you're within 49 days of the end of your contract, you can switch to another supplier without incurring exit fees  .

IF you can find anyone cheaper. 

Userlevel 7
Badge +11

@Angliaman 

https://purepla.net/blog/10-million-energy-customers-will-be-charged-an-extra-1-billion-from-1-april-with-the-big-6-energy-companies

https://purepla.net/blog/whats-happening-with-energy-prices

It’s purely a gamble, if you think prices will drop choose the variable (and that means no penalty for switching) if you think prices are on the way up choose the fixed tariff.

Choosing the first option gives you more time to decide...

Userlevel 7
Badge +9

Here's what Ofgem said when they announced the increase in the price cap  

Ofgem has announced today that from 1 April 2021 the price cap will return to pre-pandemic levels, principally as a result of changes in wholesale energy prices.  

When wholesale prices fell sharply last year in the wake of the first lockdown, the level of the price cap fell by £84 in October to its lowest level yet for the current winter period.   

Demand for energy has since recovered which has pushed wholesale prices back up to more normal levels. 

For six months from 1 April the price cap will increase by £96 to £1,138 for 11 million default tariff customers, and by £87 to £1,156 for 4 million pre-payment meter customers.

About two/three weeks ago, MSE indicated Pure Planet were the cheapest of the well-established suppliers…

Stephen

 

Userlevel 3

Thanks folks. Just a bit shocked at the level of increase.

Due to Coronavirus, 2020 was stupidly cheap for energy compared to recent trends, at one point things were so bad/good, that people were being paid to take oil - Why some oil drillers will pay you to take their crude (yahoo.com) - this filtered through to the retail markets in April and May (I know this because I ordered heating oil 02/04/2020 - at a price which was itself the ‘lowest in over 3 years’ and between the order and delivery, the price had almost halved) - missed out on that one.

Short of another worldwide pandemic, I doubt we’ll see it’s like again. Instead of complaining about the increase, people should be thankful they managed to get a fixed deal close to the low point.

Just my personal opinion.

Userlevel 3

Due to Coronavirus, 2020 was stupidly cheap for energy compared to recent trends, at one point things were so bad/good, that people were being paid to take oil - Why some oil drillers will pay you to take their crude (yahoo.com) - this filtered through to the retail markets in April and May (I know this because I ordered heating oil 02/04/2020 - at a price which was itself the ‘lowest in over 3 years’ and between the order and delivery, the price had almost halved) - missed out on that one.

Short of another worldwide pandemic, I doubt we’ll see it’s like again. Instead of complaining about the increase, people should be thankful they managed to get a fixed deal close to the low point.

Just my personal opinion.

Sorry if you feel I’m complaining about a 21% increase if I wish to continue my fixed rate deal. I take it you feel that’s perfectly acceptable. As I have been on a fixed rate for the past 11 months I didn’t notice the PP variable rate drop to reflect the ‘stupidly cheap’ energy costs but if it did I stand corrected. 

Userlevel 7
Badge +9

Out of Curiosity Angliaman have you explored what the options are to equate the 21% with other suppliers based on present market rates. I’ll be doing that when my fix ends in June. Glad I did fix though because its been a good save bearing in mind the colder winter and staying in.  Its how suppliers hedge/procure energy that differs for fixed and variable, but I’m being simplistic.... Each supplier I guess has its own forward purchasing model and it would be impossible for any supplier to be the cheapest at all times as that would be curtains! I would not be surprised if that 21% does not look as bad once compared...but I haven’t yet looked, so would be interested in your feedback.

 

 

 

Sorry if you feel I’m complaining about a 21% increase if I wish to continue my fixed rate deal. I take it you feel that’s perfectly acceptable. As I have been on a fixed rate for the past 11 months I didn’t notice the PP variable rate drop to reflect the ‘stupidly cheap’ energy costs but if it did I stand corrected. 

My point was, and remains, that you are comparing a period of unprecedented reductions in wholesale energy prices, against a period when those prices have started to recover.
Perhaps I only notice it more because heating oil changes prices every few days, and I check them every weekend when I’m planning to buy oil.

The price of oil, love it or hate it, affects the wholesale prices for other forms of energy.
The wholesale price for energy on a ‘day-ahead’ basis on 1st Dec 2019 was 39.94 per MwH
The wholesale price for energy on a ‘day-ahead’ basis on 1st April 2020 was 20.94 per MwH
The wholesale price for energy on a ‘day-ahead’ basis on 1st May 2020 was 24.13 per MwH
The wholesale price for energy on a ‘day-ahead’ basis on 1st Dec 2020 was 59.57 per MwH

Now obviously, I don’t know when you joined, but on the assumption that you are within 49 days of contract end - you signed up fairly near to the low point of last year’s price drop, since when the price has almost trebled (OFGEM don’t provide figures after 1st Dec 2020)

So to answer your questions:

’Has the wholesale price of electricity risen so much?’
And then some, if the price of the energy you receive were solely reliant on the wholesale day-ahead price, you’d notice a much larger jump, however there are many other factors in the price of your energy.

 

‘Do I feel it’s acceptable?’
Up to a point, yes.
Even though I’ve been a Pure Planet customer for almost 2 years, I can’t say they dropped the prices as much, or as rapidly, as the wholesale price fell last year - probably for much the same reasons that they haven’t increased by 200% this year.

I took out a fixed rate deal in August, I’m fairly certain I will be just as unhappy as you are when I see my new fixed-rate prices on 25th June. Its bad enough that my ‘Smart Meter’ likes to remind me that energy was 12 pence per kWh when it was installed.

It’s the nature of the UK energy market, short of going ‘off-grid’ we’re all to some degree at its mercy.

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